NEW HAVEN, Conn. Aug 31, 2005 -- A Virginia-based insurance broker agreed to pay more than $30 million to settle allegations it steered clients to preferred insurance companies and shared rebates with one of the nation's largest obstetrician and gynecologist management companies.

Hilb Rogal & Hobbs Co., the nation's eighth-largest insurance broker, announced Wednesday it had reached an agreement with Connecticut Attorney General Richard Blumenthal and the state's insurance agency.

According to their settlement agreement, state insurance investigators say HRH shared commissions with Women's Health Connecticut, an Avon-based company that provides management services to more than 140 doctors and other health care providers in Connecticut.

Companies such as Women's Health Connecticut hire brokers to help find the best insurance providers, who then pay the brokers a commission. It is illegal for brokers to pay clients or share commissions to secure their business a practice called rebating.

Investigators say HRH also steered clients to favored insurance brokers who boosted commissions at the expense of those companies. That illegal practice has been the one most widely uncovered during industry investigations this year by attorneys general in New York and Connecticut.

HRH was not required to admit criminal wrongdoing in the case. The company's attorneys admitted only that state investigators were prepared to bring those allegations.

An attorney for Women's Health Connecticut has previously denied it received any rebates. According to the settlement agreement, however, HRH disguised the rebates by writing phony contracts for services that Women's Health Connecticut wasn't really providing.

"It's a groundbreaking win for consumers and a clear warning for the entire industry that these schemes must stop," Blumenthal said.

Blumenthal has said the practice of rebating Women's Health Connecticut helped to raise medical malpractice rates for Connecticut doctors. The provider of management services has been one of the most outspoken supporters of caps on medical malpractice claims, saying they are responsible for driving up insurance premiums.

Under the agreement, HRH will establish a $30 million fund to be distributed
among its other clients. HRH has also agreed to pay a $250,000 civil fine,
enhance disclosure practices and establish a business practices committee within
its board of directors.

"I firmly believe that this agreement serves the best long-term interests of
our associates, clients and shareholders," said Martin Vaughn III, HRH chairman
and chief executive.

The attorney general's office said it planned to hold a news conference later
Wednesday to discuss the settlement.

Stanley Twardy, an attorney for Women's Health Connecticut, said he had not
seen the settlement and would not comment.